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Exam 4: Accrual Accounting Concepts

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Question 91

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Accrued revenues are revenues that have been recognized but cash has not been received before financial statements have been prepared.

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Question 92

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Adjustments affect at least:

A) one revenue and one expense account.
B) one asset and one liability account.
C) one revenue and one balance sheet account.
D) one income statement account and one balance sheet account.

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Question 93

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Which of the following would not be an application of the revenue recognition or expense recognition principle?

If a company fails to adjust a Prepaid Rent account for rent that has expired what effect will this have on that month's financial statements?

Skypress Company collected $11200 in May of 2022 for 4 months of service which would take place from October of 2022 through January of 2023.The revenue reported from this transaction during 2022 would be:

Which of the following items describe the two classifications of adjustments?

A company usually determines the amount of supplies used during a period by:

The fiscal year opened for Noland Manufacturing with a $2700 balance in its prepaid insurance account.They purchased $9600 in insurance policies during the year.If $1725 of insurance has expired during the year what is the year-end balance in the prepaid insurance account?

The general term employed to indicate an expense that has not been paid or revenue that has not been received and has not yet been recognized in the accounts is:

The adjustment for unearned revenue results in an increase to an asset account and an increase to a revenue account.

George-Bellingham Company borrowed $6000 from Jackson County Community Bank on November 1 by issuing a 12% 3-month note.Use the following tabular analysis to determine what amounts would be reported in the December 31 financial statements: $\begin{array}{llcc} \underline{\text { Assets } } &= & \underline{\text { Liabilities }} &+\underline{ \text { Stockholders' Equity} }\end{array}$ $\begin{array}{c}\begin{array}{l}\\\underline{\text { cash }}=\\ \\\end{array}\begin{array}{c}\text { Interest }\\\underline{\text { Payable }}+\\\end{array}\begin{array}{l}\text { Notes } \\\underline{\text { Payable }} -\\\end{array} \begin{array}{c}\text {common}\\ \underline{\text {Stock}} +\\\end{array}\begin{array}{l}\\\underline{\text {Revenue }} -\\\end{array}\begin{array}{lll}\text { Supplies }\\\underline{\text {Expense}} \\\end{array} \end{array}$

Wang Company had the following transactions during 2022: Sales of $10800 on account Collected $4800 for services to be performed in 2023 Paid $2600 cash in salaries for 2017 Purchased airline tickets for $600 in December for a trip to take place in 2023 What is Wang's 2022 net income using accrual accounting?

Under the cash basis of accounting:

Revenue received before it is recognized and expenses used or consumed before being paid are both initially recorded as liabilities.

The Harris Company purchased equipment for $15000 on December 1.It is estimated that annual depreciation on the computer will be $3000.If financial statements are to be prepared on December 31 the company should make the following adjustment:

The revenue recognition principle and the expense recognition principle are helpful guides used in determining net income or net loss for a period.

Boyce Company purchased office supplies costing $7000 and increased Supplies for the full amount.At the end of the accounting period a physical count of office supplies revealed $1800 still on hand.The appropriate adjustment to be made at the end of the period would be:

The adjustment for accrued salaries requires a decrease to Salaries and Wages Payable.

Accumulated Depreciation is a liability account.

The accrued interest for a three month note payable of $10000 dated December 1 2017 at an interest rate of 6% is $150 on December 31 2017.